George Iknadosian, Accused of Supplying Mexican Cartels With Guns, Sues Arizona, City of Phoenix and Terry Goddard

A Phoenix firearms dealer once accused of supplying ruthless Mexican drug cartels with guns is suing the state, city of Phoenix and Arizona Attorney General Terry Goddard for malicious prosecution.

Last spring, state and federal authorities thought they had nailed George Iknadosian, (right), owner of X-Caliber Guns, for knowingly selling guns to people who resold them to the cartels.

But the high-profile case went up in smoke when a judge ruled that prosecutors hadn't produced any evidence that the guns had ended up in the wrong hands.

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The arrest and bogus prosecution devastated Iknadosian emotionally and financially, according to the lawsuit. (Click here for the copy published by Courthousenews.com).

Iknadosian was jailed for several days before posting bond, his house and business were raided and seized in forfeiture proceedings, and his business reputation was ruined.

(The charges even hurt the reputation of a Texas business with a similar name. Apichart Chong, president of X-Caliber Tactical in Round Rock, told New Times that "violent protesters" targeted his store last year until they figured out they had the wrong place).

Now that the state's case is finished, Iknadosian wants compensation. The lawsuit doesn't state the total dollar amount sought, but Iknadosian's lawyer, Tom Baker, estimates in the suit that the gun dealer has lost at least $2 million due to the seizures.

Iknadosian accuses Phoenix police officer Aimee Smith of conspiring with members of the U.S. Alcohol, Tobacco and Firearms Bureau to conduct a wrongful arrest and search of his property, and he takes Goddard to task for making numerous public statements about the case:

The Arizona Attorney General himself portrayed Mr. Iknadosian as a major firearms
trafficker for the Mexican drug cartels. The Arizona Attorney General himself implied that Mr. Iknadosian was responsible in whole or in part for the Mexican drug wars and the deaths of Mexican law enforcement officers.

Iknadosian is right about that. Goddard, who apparently plans on running for governor, used the case to portray himself as tough on both the drug cartels and rogue gun dealers. Goddard's also been interested in cooperating as much as possible with Mexican officials. The issue of guns flowing south helps take some of the heat off those officials by directing some of the blame for the out-of-control cartel violence on the United States.

In a political move that prosecutors usually find abhorrent, Goddard did indeed crucify the gun dealer publicly before the trial. In March of 2009, he told the Arizona Republic:

The important part of this case is the number of weapons that ended up at crime scenes in Mexico... There's no question that he (Iknadosian) was a specialist. He was able to get the weapons they wanted in the volumes they needed.

A week or so after Goddard made that statement, Superior Court Judge Robert Gottsfield wrote in a minute entry after dismissing the case that, "There is no proof whatsoever that any prohibited possessor ended up with the firearms."

Iknadosian may end up with a multi-million-dollar payout.

Of course, that would be an "only in America" kind of ending. Questions remain about Iknadosian's innocence, despite his court victory.

Gottsfield's minute entry also notes that "to be sure," the state had witnesses who claimed to be "straw buyers" -- people who bought guns from Iknadosian to give to criminals.

About 700 guns were sold to the buyers, some of which were traced back to shoot-outs between Mexican police and cartel members, the state had alleged.